Question 1

Corporations have achieved dominance in which of the following ways?

Accepted Answer

A) This form of organization accounts for 85 percent of the gross revenues of all business entities. 
B) Over 50 percent of all U.S. businesses are organized in the corporate form. 
C) Over 75 percent of American adults own stock directly or indirectly. 
D) All of the above. 
A) This form of organization accounts for 85 percent of the gross revenues of all business entities. 
B) Over 50 percent of all U.S. businesses are organized in the corporate form. 
C) Over 75 percent of American adults own stock directly or indirectly. 
D) All of the above.

Question 2

The possible consequences of a defective incorporation include which of the following?

Accepted Answer

A) The state may bring an action against the association for involuntary dissolution. 
B) A third party may assert that it is not liable to the association. 
C) The associates are held personally liable to a third party. 
D) All of the above. 
E) None of the above. 
A) The state may bring an action against the association for involuntary dissolution. 
B) A third party may assert that it is not liable to the association. 
C) The associates are held personally liable to a third party. 
D) All of the above. 
E) None of the above.

Question 3

"Piercing the corporate veil" will result in personal liability of shareholders.

Accepted Answer

A) True 
 B)False

Question 4

All of the following are true of promoters of a corporation EXCEPT:

Accepted Answer

A) They solicit investors to begin the corporation. 
B) They prepare the formal documents of incorporation. 
C) They may make contracts in the name of the corporation. 
D) They continue to solicit capital whenever needed after incorporation. 
A) They solicit investors to begin the corporation. 
B) They prepare the formal documents of incorporation. 
C) They may make contracts in the name of the corporation. 
D) They continue to solicit capital whenever needed after incorporation.

Question 5

What powers does a corporation normally possess?

Accepted Answer

The general powers granted by incorporat

Question 6

Title to corporate property belongs to the shareholders.

Accepted Answer

A) True 
 B)False

Question 7

The Revised Act provides that at least two persons need to act as incorporators,though more may do so.

Accepted Answer

A) True 
 B)False

Question 8

A promoter is a person who takes the preliminary steps to organize a corporation.

Accepted Answer

A) True 
 B)False

Question 9

Define "promoter" in reference to a corporation.

Accepted Answer

A promoter is a person who brings about

Question 10

The president of Hi-Glow Cosmetics sends his top chemist to Hi-Glow's competitor's labs to steal its formula for shiny lipstick.The chemist gets caught and is sent to jail.Can Hi-Glow be found to be criminally liable?

Accepted Answer

A) Yes, under the doctrine of ultra vires. 
B) Yes, since the president authorized the crime. 
C) No, because a corporation cannot go to jail. 
D) Both (a) and (b). 
A) Yes, under the doctrine of ultra vires. 
B) Yes, since the president authorized the crime. 
C) No, because a corporation cannot go to jail. 
D) Both (a) and (b).

Question 11

Whether a corporation is a de facto corporation may be challenged by:

Accepted Answer

A) an individual. 
B) another corporation. 
C) the state in which the business attempted to incorporate. 
D) All of the above. 
A) an individual. 
B) another corporation. 
C) the state in which the business attempted to incorporate. 
D) All of the above.

Question 12

Identify and give the basic characteristics of each of the following specialized types of corporations.
a.Professional corporations
b.Public corporations
c.Nonprofit corporations

Accepted Answer

a.Used by doctors,dentists,lawyers,accou

Question 13

What is the doctrine of ultra vires? What is the effect of an ultra vires contract?

Accepted Answer

Ultra vires acts are without legal autho

Question 14

Courts have responded by piercing the veil when the shareholders have:

Accepted Answer

A) not followed the formalities of corporate procedures. 
B) not provided an adequate financial basis for the business. 
C) used the corporation to defraud. 
D) All of the above. 
E) (a) and (c) only. 
A) not followed the formalities of corporate procedures. 
B) not provided an adequate financial basis for the business. 
C) used the corporation to defraud. 
D) All of the above. 
E) (a) and (c) only.

Question 15

A corporation owned by one person is treated under the law as separate from that person.

Accepted Answer

A) True 
 B)False

Question 16

Under the Statutory Close Corporation Supplement to the MBCA,a close corporation must have bylaws on file with the office of the secretary of state or some other public office.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following is not a requirement of a Subchapter S corporation?

Accepted Answer

A) It must be a domestic corporation. 
B) It must have no more than 50 shareholders. 
C) A corporation or partnership cannot be a shareholder. 
D) It may have only one class of stock. 
A) It must be a domestic corporation. 
B) It must have no more than 50 shareholders. 
C) A corporation or partnership cannot be a shareholder. 
D) It may have only one class of stock.

Question 18

What is a Subchapter S Corporation,and what are its requirements?

Accepted Answer

Subchapter S of the Internal Revenue Cod

Question 19

Name the classifications of corporations.

Accepted Answer

Corporations may be classified

Question 20

The Model Business Corporation Act is a state statute that,like the UCC,has been adopted by all of the states in the United States to make state incorporation statutes uniform throughout the United States.

Accepted Answer

A) True 
 B)False

Exam 33: Nature and Formation of Corporations

Corporations have achieved dominance in which of the following ways?

The possible consequences of a defective incorporation include which of the following?

"Piercing the corporate veil" will result in personal liability of shareholders.

All of the following are true of promoters of a corporation EXCEPT:

What powers does a corporation normally possess?

Title to corporate property belongs to the shareholders.

The Revised Act provides that at least two persons need to act as incorporators,though more may do so.

A promoter is a person who takes the preliminary steps to organize a corporation.

Define "promoter" in reference to a corporation.

The president of Hi-Glow Cosmetics sends his top chemist to Hi-Glow's competitor's labs to steal its formula for shiny lipstick.The chemist gets caught and is sent to jail.Can Hi-Glow be found to be criminally liable?

Whether a corporation is a de facto corporation may be challenged by:

Identify and give the basic characteristics of each of the following specialized types of corporations. a.Professional corporations b.Public corporations c.Nonprofit corporations

What is the doctrine of ultra vires? What is the effect of an ultra vires contract?

Courts have responded by piercing the veil when the shareholders have:

A corporation owned by one person is treated under the law as separate from that person.

Under the Statutory Close Corporation Supplement to the MBCA,a close corporation must have bylaws on file with the office of the secretary of state or some other public office.

Which of the following is not a requirement of a Subchapter S corporation?

What is a Subchapter S Corporation,and what are its requirements?

Name the classifications of corporations.

The Model Business Corporation Act is a state statute that,like the UCC,has been adopted by all of the states in the United States to make state incorporation statutes uniform throughout the United States.

Introduction to Law

Business Ethics

Civil Dispute Resolution

Constitutional Law

Administrative Law

Criminal Law

Intentional Torts

Negligence and Strict Liability

Introduction to Contracts

Mutual Assent

Conduct Invalidating Assent

Consideration

Illegal Bargains

Contractual Capacity

Contracts in Writing

Third Parties to Contracts

Performance, Breach, and Discharge

Contract Remedies

Introduction to Sales and Leases

Performance

Transfer of Title and Risk of Loss

Product Liability: Warranties and Strict Liability

Sales Remedies

Form and Content

Transfer and Holder in Due Course

Liability of Parties

Bank Deposits, Collections, and Funds Transfers

Relationship of Principal and Agent

Relationship With Third Parties

Formation and Internal Relations of General Partnerships

Operation and Dissolution of General Partnerships

Limited Partnerships and Limited Liability Companies

Financial Structure of Corporations

Management Structure of Corporations

Fundamental Changes of Corporations

Secured Transactions and Suretyship

Bankruptcy

Securities Regulation

Intellectual Property

Employment Law

Antitrust

Accountants Legal Liability

Consumer Protection

Environmental Law

International Business Law

Introduction to Property, property Insurance, Bailments, and Documents of Title

Interests in Real Property

Transfer and Control of Real Property

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